2012 Legislative Agenda : USPS, Elections Force Hands

The USPS posted a $5.1 billion loss for its 2011 fiscal year, a figure that would have eclipsed $10 billion had Congress not postponed its crippling $5.5 billion payment to pre-fund retiree health benefits. Mail volume dropped by 3 billion pieces over the previous year and profitability from First-Class Mail dipped 5.8 percent.

The House and Senate have been kicking around legislative relief efforts, each taking vastly different roads to the same destination, while the tide of red ink continues to engulf the Postal Service. Postmaster General Patrick Donahoe and his staff determined it must reduce operating costs $20 billion by 2015 in order to become profitable again.

This past fall, the USPS began studying 3,700 facilities and 250 processing centers for possible closure and lowering service standards for First-Class Mail; the latter move would save an estimated $2.1 billion. Near the end of 2011, a number of U.S. Senators asked the Postal Service to delay any closings or consolidations. Mr. ZIP acquiesced, at least until May 15.

Donahoe has effectively put the ball back in Congress' court, armed with a moving-forward plan should Congress come up lame in its bid to author new postal reform.

"To be cynical, we've been at critical times in the past and Congress just kicks the can down the road," Lyons notes. "We may have reached the tipping point this time around. The legislative process is moving through the House and Senate. From a time line standpoint, this will be something Congress is considering during the first four months of 2012."

Each chamber has its own approach, but several key points are highly likely to be addressed by the reform package. Areas include the prefunding obligation, labor costs, workers' compensation reform, five-day delivery, and the ability to modernize and incorporate innovation in future product and service offerings—with as little Congressional oversight as possible.